New Zealand country brief

General information

New Zealand comprises two main narrow and mountainous islands, the North Island and the South Island, separated by Cook Strait, and a number of smaller outlying islands. The total land area is approximately 268,000 square kilometres (about the combined area of Victoria and Tasmania). Its maritime EEZ is roughly 430 million hectares, the fifth largest in the world. The capital, Wellington, is situated on the south-west tip of the North Island and is about the same latitude as Launceston. The Southern Alps, containing glacial systems, which have retreated and formed wide glacial valleys and inland lakes, extend the length of the South Island. The Southern Alps include New Zealand's highest mountain, Aoraki/Mt Cook (3754 m). The highest mountain in the North Island is Mount Ruapehu (2797m), an active volcano which erupts occasionally, most recently in 2007. Not far from the mountain is Lake Taupo, the largest lake in New Zealand. New Zealand has a cool temperate climate, strongly influenced by oceanic factors.

New Zealand has a population of around 4.8 million (2017). New Zealand's rate of natural increase is about 1.0 per cent per year, but this has been boosted by recent increased immigration levels and in 2015 the population increase was estimated at 1.9 per cent. Australia is a major destination for New Zealand migrants and tourists. Traditionally, most inward migration has been from the United Kingdom, Australia and Northern Europe. In more recent times, a growing number of migrants have come from the Pacific island countries, particularly Samoa, Cook Islands and Niue, and from Asia.

Bilateral Relations

Australia and New Zealand are natural allies with a strong trans-Tasman sense of family. Migration, trade and defence ties, keen competition on the sporting field, and strong people-to-people links have helped shape a close and co-operative relationship. Hundreds of thousands of Australians and New Zealanders cross the Tasman each year as tourists, for business purposes, or to visit family members. It is estimated that around 650,000 New Zealand citizens live in Australia (close to 15 per cent of New Zealand’s population), while there are around 65,000 Australians in New Zealand. Freedom of travel is facilitated through the Trans-Tasman Travel Arrangements (TTTA) of 1973, which allow Australians and New Zealanders to visit, live and work in either country without restrictions. For more information on the TTTA, see the Department of Immigration and Border Protection website. Information on access to benefits can be found at the Department of Human Services.

While New Zealand chose not to join the Australian federation in 1901, it maintains close political contact. At a government-to-government level, Australia's relationship with New Zealand is the closest and most comprehensive of all its bilateral relationships. Prime Ministers hold annual formal talks and Foreign, Trade and Defence Ministers meet regularly. New Zealand Ministers and government officials participate with their Australian federal and state counterparts in relevant COAG Council meetings, which span the domestic policy agenda and support the Council of Australian Governments (COAG).

Australia and New Zealand cooperate closely in the international arena and in regional bodies, such as the Pacific Islands Forum, APEC and the ASEAN Regional Forum. The Australia, New Zealand and ASEAN free trade agreement, AANZFTA, entered into force on 1 January 2010. Both Australia and New Zealand cooperate closely in pursuing WTO goals, notably through participation in the Cairns Group – a coalition of 19 agricultural exporting countries seeking the liberalisation of trade in agriculture. New Zealand has made valuable contributions to security in areas of high priority to Australia, notably in East Timor, Bougainville, Solomon Islands (RAMSI), Iraq and Afghanistan.

The Australia New Zealand Leadership Forum (ANZLF) is an important annual private sector-led event which brings together a diverse group of leaders from business, government, and community sectors to contribute ideas on developing the bilateral relationship. The Forum examines and debates economic, defence, political and social ties between Australia and New Zealand as well as broader strategic issues of domestic and international significance. The eleventh ANZLF was held in Sydney in October 2016. ANZLF is co-chaired on the Australian side by Ann Sherry AO, Executive Chairman of Carnival Australia, and on the New Zealand side by Adrian Littlewood, Chief Executive of Auckland Airport.

The Australian and New Zealand Prime Ministers hold an annual Leaders' Meeting, as part of a commitment by both governments to the importance of the relationship and an intention to strengthen links further, especially through deeper economic integration. The last Australia New Zealand Leaders' Meeting was held in Queenstown on 17 February 2017. Prime Ministers are planning to next meet in Australia in early 2018.

Defence Relations

In this centenary of the Australian and New Zealand Army Corps fighting side-by-side on the battlefield at Gallipoli, the defence relationship remains as important as ever. The relationship has continued from the First World War to recent operations in Timor-Leste, Solomon Islands and today in Afghanistan, the Multinational Force and Observers mission in the Sinai, and the Building Partner Capacity mission in Iraq.

Formal expressions of our security partnership are found in the 1944 Canberra Pact and 1951 ANZUS Treaty. Our bilateral defence relationship is underpinned by the 1991 Closer Defence Relations Agreement (CDR) which provides a broad strategic framework for the bilateral defence relationship.

In accordance with the recommendations of the 2011 Review of the Australia-New Zealand Defence Relationship, a framework for closer consultation and engagement on defence has been implemented since 2012.

Our defence ministers (Senator Payne and then New Zealand Minister of Defence Mr Brownlee) met in April 2017 in Auckland to discuss ongoing cooperation and opportunities to enhance our collaboration on regional security initiatives, such as the Pacific Maritime Security Program.

Political Overview

Government

New Zealand is a parliamentary democracy in the Westminster tradition. Its executive arm of government is drawn from its legislature, which currently has 121 members. Government in New Zealand differs in several ways from the traditional Westminster model. With the abolition of the Legislative Council (Upper House) in 1951, the New Zealand Parliament became unicameral. The Prime Minister (currently Bill English, who replaced John Key when he stepped down in December 2016) is the Head of Government and must have the confidence of the House to govern. Jacinda Ardern, (Labour Party), was elected leader of her party on 1 August and is the leader of the opposition, replacing Andrew Little. HM Queen Elizabeth II is the Head of State, represented by the Governor-General (Rt Hon Dame Patsy Reddy).

Parliament is summoned, prorogued or dissolved by the Governor-General. The Government's term of office is three years. It is compulsory to enrol to vote but voting itself is not compulsory.

Elections are held every three years. The next election will be held on 23 September 2017. New Zealand has a Mixed Member Proportional (MMP) electoral system, based on a German model. The first MMP election was held in 1996.

Under MMP, voters are given two votes – one for a local MP (an electorate vote) and one for a political party (a party list vote). Maori may choose to be on either the General or the Maori electoral roll. There are 121 seats in the current Parliament, of which 71 are electorate seats, including seven representing Maori electorates, and 50 are party list seats. Party list seats are allocated to political parties in proportion to percentage shares of the party list vote.

With the introduction of MMP the opportunity for minor parties to gain parliamentary representation increased. As a result, coalition and minority governments have become commonplace. A referendum on the electoral system held at the 2011 general election returned a solid 58 per cent endorsement of the MMP system.

New Zealand's National Party won a third term in government in 2014 and governs with support from the centrist United Future Party, the free-market ACT Party and the Maori Party, all of which supported the National Party government in its previous two terms. In May 2017 Hon Gerry Brownlee was appointed Minister of Foreign Affairs replacing Hon Murray McCully who had been minister since 20018. Hon Todd McClay was appointed Minister of Trade in December 2015.

Economic Overview

Following a comprehensive reform program that began in the mid-80s, the New Zealand economy is now largely deregulated, and more internationally competitive. The production base has diversified to include a range of elaborately transformed manufactures, while maintaining a large agriculture sector, which accounts for over 60 per cent of exports. Services account for around 63 per cent of New Zealand's real Gross Domestic Product (GDP), while manufacturing accounts for 16.5 per cent. In 2016, New Zealand's main merchandise export markets were China (20.3 per cent), Australia (17.1 per cent), and the United States (10.7 per cent). New Zealand's main sources of merchandise imports were China (19.9 per cent), the EU (17.7 per cent) and Australia (12.3 per cent). New Zealand's GDP estimated growth was 4.0 per cent in 2016 and is estimated to fall to 3.1 per cent in 2017.

Bilateral economic and trade relationship

The economic and trade relationship between Australia and New Zealand is shaped by the Australia New Zealand Closer Economic Relations Trade Agreement (CER or ANZCERTA), which came into effect on 1 January 1983. ANZCERTA is one of the world's most open and successful free trade agreements. Two-way trans-Tasman merchandise trade has increased at an average annual rate of around eight per cent following its adoption. New Zealand is Australia's sixth largest goods trading partner, ninth largest source of foreign investment and third most important destination for Australian investment abroad. For detailed information on ANZCERTA see About ANZCERTA. For information on Rules of Origin under ANZCERTA, see CER Article 3 – Rule of Origin.

In 2016, trans-Tasman goods and services trade was valued at around $24.8 billion. Australian merchandise exports to New Zealand totalled $8.7billion, while merchandise imports from New Zealand totalled $7.6 billion. Two-way trade in services amounted to $8.5 billion in 2016.

In the year up to March 2017 Australia was New Zealand’s number one overall trade partner, its largest destination for total exports as well as most important services trading partner. China was New Zealand’s largest goods trading partner both as a destination for exports and source of imports. The EU was New Zealand's number one overall import source.

In 2016 Australia's total investment in New Zealand was $106.9 billion; while New Zealand's total investment in Australia was $46.2 billion. Australia is the largest foreign investor in New Zealand, with over half of the stock of Australia's total investment in FDI ($66.6billion in 2016), reflecting the high level of economic integration. Australian investment in New Zealand includes the banking, insurance, building, infrastructure, telecoms, energy and retail sectors.

Single Economic Market (SEM)

The last major review of ANZCERTA in 1995 focused on advancing "third generation" trade facilitation issues including eliminating remaining regulatory impediments to trade. The Australian and New Zealand Governments decided to take a Single Economic Market (SEM) approach to harmonise the two economies to enable business, consumers and investors to conduct operations across the Tasman in a seamless regulatory environment.

In February 2016, Prime Minister Turnbull and his then New Zealand counterpart, John Key noted the strong progress that had been made in creating a seamless business environment between the two countries which had helped businesses and consumers on both sides of the Tasman and provided scale and a platform for expansion into third markets. Prime Ministers directed officials to develop ideas for further progressing the SEM agenda.
At the October 2016 inaugural SEM meeting of Australian and New Zealand ministers, it was agreed that the reinvigoration of the SEM agenda was a vital means of promoting mutual growth, competitiveness and prosperity. Ministers agreed that joint work would focus on a roadmap with five pillars. These pillars are:

Increase the scale and attractiveness of Australia & NZ infrastructure market to investors and major infrastructure companies

These pillars are not exclusive and collaboration continues in other areas. At the 2017 Leaders’ meeting, amongst other issues, Mr Turnbull and Mr English

agreed to continue to push for open markets and regional economic integration and to collaborate to emphasise the benefits a liberalised and rules-based international trading system to generate jobs and to lower costs to consumers in New Zealand and Australia and, more broadly, throughout the region and the world.

welcomed the formal launch by Ministers of the Australia & New Zealand Infrastructure Pipeline (ANZIP) in October 2016

noted the progress in goods facilitation with the mutual recognition agreement between the Australian Trusted Trader program and the New Zealand Secure Exports Scheme, to provide reciprocal trade facilitation benefits to member businesses

noted that in 2017 the two countries would continue work to align border clearance processes, while managing respective border risks

advised that Australia and New Zealand continued to work together closely on tax issues, especially in relation to the OECD base erosion and profit shifting (BEPS) project